UK Unveils 'New Era,' Of Tax Cuts With Mini-Budget

In line with much of the tax focus for Liz Truss during her leadership battle with British Indian ex-minister Rishi Sunak to be elected British Prime Minister, her new Chancellor tabled a mini-budget in Parliament on Friday packed with some of the biggest tax cuts in the country for 50 years.

The much-anticipated fiscal event, which had been delayed over the course of the state mourning period for the late Queen Elizabeth II, was dubbed by Chancellor Kwasi Kwarteng as a "new growth plan for a new era" with the ambitious target for hitting 2.5 per cent economic growth in a couple of years' time.

It sees income tax and stamp duty land tax on home purchases cut and planned rises in business taxes scrapped. "Economic growth isn't some academic term with no connection to the real world," said Kwarteng. "We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone," he said. Kwarteng, who made history as the UK's first black Chancellor when he was appointed by Truss soon after taking office on September 6, has promised more jobs, higher pay and more money to fund public services like schools and the National Health Service (NHS).

"Cuts to stamp duty will get the housing market moving and support first-time buyers to put down roots. New Investment Zones will bring business investment and release land for new homes in communities across the country. And we're accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long," he declared.

To tackle the "biggest drag on growth", which is the high cost of energy driven by the Russia-Ukraine conflict and is, in turn, driving up inflation in the UK, the government says its Energy Price Guarantee will save the typical household 1,000 a pounds year on their energy bill with the Energy Bill Relief Scheme halving the cost of business energy bills, reducing peak inflation by about 5 percentage points.

The mini-budget statement also included details of the cost of the government's plan to cap energy bills for households and businesses struggling with soaring energy bills, which is estimated to cost around 60 billion pounds. "We expect the cost to come down as we negotiate new, long-term energy contracts with suppliers," Kwarteng said.

The UK's Treasury department says the major tax reforms introduced by the minister will allow businesses to keep more of their own money, encouraging investment, boosting productivity and creating jobs. New measures include cancelling the planned rise in corporation tax, keeping it low in line with other G20 nations at 19 per cent, and reversing the 1.25 percentage point rise in National Insurance contributions, a change which the government claims will save 920,000 businesses almost 10,000 pounds on average next year.

Sector-specific support for pubs and hospitality businesses and freezing alcohol duty on beer, cider, wine and spirits for another year are among the other business-directed tax measures. The additional steps follow the government's Energy Bill Relief Scheme for businesses to cap costs per unit, which will protect them from soaring energy costs this winter by providing a discount on wholesale gas and electricity prices, the Treasury said. In another expected move, the cap on bankers' bonuses is to be scrapped as part of efforts to "reaffirm" the UK's status as a financial services hub.

"All the bonus cap did was to push up the basic salary to bankers or drive activity outside Europe," Kwarteng told the Commons. The Opposition Labour Party, however, said the government's new measures would not solve the cost-of-living crisis and was a "plan to reward the already wealthy".

"The Conservatives cannot solve the cost-of-living crisis, the Conservatives are the cost-of-living crisis, and our country cannot afford them anymore," said shadow chancellor Rachel Reeves. "The Chancellor has made clear who his priorities are today. Not a plan for growth. A plan to reward the already wealthy. A return to the trickle-down of the past. Back to the future, not a brave new era," she said.

(PTI)